The ultimate climate change FAQ + Emissions trading | The Guardianhttp://www.theguardian.com/environment/series/the-ultimate-climate-change-faq+emissionstrading
Indexen-gbGuardian News and Media Limited or its affiliated companies. All rights reserved. 2015Sun, 02 Aug 2015 18:31:39 GMT2015-08-02T18:31:39Zen-gbGuardian News and Media Limited or its affiliated companies. All rights reserved. 2015The Guardianhttp://assets.guim.co.uk/images/guardian-logo-rss.c45beb1bafa34b347ac333af2e6fe23f.pnghttp://www.theguardian.com
Carbon tax v cap-and-trade: which is better?http://www.theguardian.com/environment/2013/jan/31/carbon-tax-cap-and-trade
This Q&amp;A is part of the Guardian's <a href="http://www.guardian.co.uk/environment/series/the-ultimate-climate-change-faq">Ultimate climate change FAQ</a><br /><br />• <a href="http://www.guardian.co.uk/environment/series/the-ultimate-climate-change-faq">See all questions and answers</a><br />• <a href="http://www.guardian.co.uk/environment/blog/2010/nov/05/ultimate-climate-change-faq">Read about the project</a><p><a href="http://www.guardian.co.uk/environment/2012/may/21/economists-climate-change-market-failure">Economists argue that, if the market is left to operate freely, greenhouse gas emissions will be excessive</a>, since there is insufficient incentive for firms and households to reduce emissions. As such, they recommend applying the <a href="http://www.guardian.co.uk/environment/2012/jul/02/polluter-pays-climate-change">polluter pays principle</a> and placing a price on carbon dioxide and other greenhouse gases. This can be implemented either through a carbon tax (known as a price instrument) or a cap-and-trade scheme (a so-called quantity instrument).</p><p>A <a href="http://www.guardian.co.uk/environment/carbon-tax">carbon tax</a> imposes a tax on each unit of greenhouse gas emissions and gives firms (and households, depending on the scope) an incentive to reduce pollution whenever doing so would cost less than paying the tax. As such, the quantity of pollution reduced depends on the chosen level of the tax. The tax is set by assessing the cost or damage associated with each unit of pollution and the costs associated with controlling that pollution. Getting the tax level right is key: too low and firms and households are likely to opt for paying the tax and continuing to pollute, over and above what is optimal for society. Too high and the costs will rise higher than necessary to reduce emissions, impacting on profits, jobs and end consumers.</p> <a href="http://www.theguardian.com/environment/2013/jan/31/carbon-tax-cap-and-trade">Continue reading...</a>EnvironmentCarbon taxEmissions tradingGreenhouse gas emissionsClimate changeThu, 31 Jan 2013 13:59:59 GMThttp://www.theguardian.com/environment/2013/jan/31/carbon-tax-cap-and-tradePeter Macdiarmid/Getty ImagesCarbon taxes and cap-and-trade schemes both add to the price of emitting CO2, albeit in slightly different ways. Photograph: Peter Macdiarmid/Getty ImagesPeter Macdiarmid/Getty ImagesThe stock market crash and you Photograph: Peter Macdiarmid/Getty Images<strong>Grantham Research Institute</strong>2013-01-31T13:59:59ZWhy do economists describe climate change as a 'market failure'?http://www.theguardian.com/environment/2012/may/21/economists-climate-change-market-failure
Unregulated markets have overproduced CO2 because the costs are not priced into the transaction<br /><br />• This Q&amp;A is part of the Guardian's <a href="http://www.guardian.co.uk/environment/series/the-ultimate-climate-change-faq">ultimate climate change FAQ</a><br />• <a href="http://www.guardian.co.uk/environment/series/the-ultimate-climate-change-faq">See all questions and answers</a><p>When free markets do not maximise society's welfare, they are said to 'fail' and policy intervention may be needed to correct them. <a href="http://www.guardian.co.uk/environment/2007/nov/29/climatechange.carbonemissions">Many economists have described</a> <a href="http://www.guardian.co.uk/environment/2010/dec/21/what-is-climate-change">climate change</a> as an example of a market failure – though in fact a number of distinct market failures have been identified.</p><p>The core one is the so-called 'greenhouse-gas externality'. <a href="http://www.guardian.co.uk/environment/2011/feb/04/man-made-greenhouse-gases">Greenhouse gas emissions</a> are a side-effect of economically valuable activities. Most of the impacts of emissions do not fall on those conducting the activities – instead they fall on future generations or people living in developing countries, for example – so those responsible for the emissions do not pay the cost. The adverse effects of greenhouse gases are therefore 'external' to the market, which means there is usually only an ethical – rather than an economic – incentive for businesses and consumers to reduce their emissions. As a result, the market fails by over-producing greenhouse gases.</p> <a href="http://www.theguardian.com/environment/2012/may/21/economists-climate-change-market-failure">Continue reading...</a>EnvironmentClimate changeGreenhouse gas emissionsEmissions tradingRenewable energyMon, 21 May 2012 14:24:43 GMThttp://www.theguardian.com/environment/2012/may/21/economists-climate-change-market-failureTony Gentile/REUTERSMarkets have made a calmer start to the week. Photograph: Tony Gentile/REUTERSTony Gentile/REUTERSMarkets have made a calmer start to the week. Photograph: Tony Gentile/REUTERS<strong>Grantham Research Institute</strong> and Duncan Clark2012-05-21T14:24:43ZWhat is emissions trading?http://www.theguardian.com/environment/2011/jul/05/what-is-emissions-trading
This Q&amp;A is part of the Guardian's <a href="http://www.guardian.co.uk/environment/series/the-ultimate-climate-change-faq">ultimate climate change FAQ</a><br /><br />• <a href="http://www.guardian.co.uk/environment/series/the-ultimate-climate-change-faq">See all questions and answers</a><br />• <a href="http://www.guardian.co.uk/environment/blog/2010/nov/05/ultimate-climate-change-faq">Read about the project</a><p><a href="http://www.guardian.co.uk/environment/emissionstrading">Emissions trading</a> is a market-based approach to controlling pollution. By creating tradable pollution permits it attempts to add the profit motive as an incentive for good performance, unlike traditional environmental regulation based solely on the threat of penalties.</p><p>Developed in the 70s and 80s, emissions trading was introduced<a href="http://en.wikipedia.org/wiki/Clean_Air_Act_%28United_States%29"> in the US in 1990 to combat acid rain</a>, but more recently it has grown in prominence as a way of tackling greenhouse gas emissions linked to climate change.</p> <a href="http://www.theguardian.com/environment/2011/jul/05/what-is-emissions-trading">Continue reading...</a>EnvironmentClimate changeEmissions tradingGreenhouse gas emissionsGreen politicsTue, 05 Jul 2011 10:28:00 GMThttp://www.theguardian.com/environment/2011/jul/05/what-is-emissions-tradingMartin Meissner/APPower plants in Europe, such as this coal power station in Gelsenkirchen, Germany, are regulated by an emissions trading scheme. Photograph: Martin Meissner/APMartin Meissner/APSteam and smoke rises from a coal power station in Gelsenkirchen, Germany. The news last week that hackers stole euro 7 million ($9.5 million) in carbon emissions permits from trading company Blackstone Global Ventures revealed just how vulnerable the market in emissions trading is. Photograph: Martin Meissner/APSandbag2011-07-05T10:28:00ZWhat is the emissions trading scheme and does it work?http://www.theguardian.com/environment/2011/jun/07/ets-emissions-trading
This question and answer is part of the Guardian's <a href="http://www.guardian.co.uk/environment/series/the-ultimate-climate-change-faq">ultimate climate change FAQ</a><br /><br />• <a href="http://www.guardian.co.uk/environment/series/the-ultimate-climate-change-faq">See all questions and answers</a><br />• <a href="http://www.guardian.co.uk/environment/blog/2010/nov/05/ultimate-climate-change-faq">Read about the project</a><p>The European Union's <a href="http://ec.europa.eu/clima/policies/ets/index_en.htm">Emissions Trading System</a> (ETS) is the world's biggest scheme for trading greenhouse gas emissions allowances. Launched in 2005, it covers some 11,000 power stations and industrial plants in 30 countries, whose carbon emissions make up almost 50% of Europe's total.<br /> <br />A cap on the total emissions allowed within the scheme is set, and allowances adding up to the cap are provided to the companies regulated by the scheme. The companies are required to measure and report their carbon emissions and to hand in one allowance for each tonne they release. Companies can trade their allowances, providing an incentive for them to reduce their emissions.</p><p>The current cap is set to fall by 1.74% annually to achieve a target of reducing emissions in 2020 to 21% below their level in 2005. In June 2011 the price of an allowance was around €16. The trade in permits is worth around $150bn annually, dwarfing other emissions trading schemes (the Clean Development Mechanism market established by the UN is valued at $1.5bn annually).</p> <a href="http://www.theguardian.com/environment/2011/jun/07/ets-emissions-trading">Continue reading...</a>EnvironmentClimate changeEmissions tradingGreenhouse gas emissionsEuropeTue, 07 Jun 2011 15:26:40 GMThttp://www.theguardian.com/environment/2011/jun/07/ets-emissions-tradingJohannes Eisele/ReutersPolicemen carry bags in front of the Deutsche Bank headquarters in April 2010, after German prosecutors said they have searched more than 230 sites in relation to suspected tax evasions in ETS carbon trading. Photograph: Johannes Eisele/ReutersJohannes Eisele/ReutersPolicemen (L) carry bags in front of the Deutsche Bank headquaters in Frankfurt, April 28, 2010. German prosecutors said on Wednesday they have searched more than 230 sites in a probe based on suspicions of tax evasions in the trading of European Union carbon dioxide (CO2) emissions rights certificates. Photograph: Johannes Eisele/ReutersSandbag2011-06-07T15:26:40Z